Investors Flock to Booming Companies
May 26, 2015 Leave a comment
Many small businesses believe that finding funding from venture capitalists is a great way to break into becoming a larger company. While this is certainly something that happens, recent trends seem to indicate that some venture capitalists are actually shying away from new companies and instead are going for the sure bet—already booming companies with an established history of success.
On the face of it, this type of shift makes a great deal of sense; why wager that some start-up will achieve success, when you could provide funding and get return on a larger name with pre-established success?
Below, I’ve gathered a quick round-up of successful companies and organizations that are receiving the type of funding I described above.
DocuSign is one of the successful companies that have recently received funding. DocuSign CEO Keith Krach has led the company to becoming the leader in Digital Transaction Management. Due to its success and exciting product, investors are wagering that the business of electronic documents will continue to grow in the future. On Tuesday May 12th, DocuSign raised $233 million in a new round of financing. Brookside Capital and Bain Capital Ventures led this round of funding. DocuSign also received another $85 million in March alone.
Carl Icahn, an activist billionaire investor, has invested $100 million in ride-sharing startup Lyft Inc. Icahn believes that Lyft can thrive in a world that is also inhabited by Uber, another ride-sharing company that has been slightly more successful. The activist billionaire investor said he is backing Lyft because he consider its valuation of $2.5 billion a “tremendous bargain” compared to Uber, which by comparison has recently been valued by investors at $41 billion.
Speaking of Uber, the ride-share company has raised a total of more than $2 billion from investors in June and December last year. Wow!
Yik Yak, the anonymous social media platform that has been gaining steam over the past year, collected $73.5 million in three financing rounds in seven months and Zenefits, a human resources start-up, raised $580 million in less than two years.
What do you think about the current trend of investors flocking to businesses with a history of success? Let us know in the comments section below!